Jun 22, 2008

Beijing Bans One Million Cars for Olympics, Sharply Raises Gas Prices

Despite ruling it out earlier, Beijing will ban one million vehicles from its streets for three months in an attempt to clear the air and roads ahead of August's "Green Olympics," officials announced yesterday. Though it was ruled out earlier, the ban, which launches on July 20, restricts cars with even and odd-numbered license plates on alternate days. The city, home to 3.29 million cars, will also compensate motorists for the restrictions by exempting them from taxes and road maintenance fees for three months, at a cost to the government of 1.3 billion yuan (US$186 million).

More expensive -- and more effective -- at cutting traffic will be the country's new gasoline prices, which rose by a record 17 percent yesterday. While the government will provide subsidies of $2.9 billion to help farmers and public transport operators cope with higher costs, and while heavily subsidized diesel and gasoline prices in China remain below $3 a gallon, many car owners -- and the emissions they generate -- will be feeling a US-like driving pinch:

"I am wondering whether I need to forget my new car and take the subway to workas the cost of driving is too high," Zhu Hong, 28, who bought her car just twomonths ago, told Reuters.

The cut in fuel subsidies came as a surprise. Some thought that concerns over social and economic impacts would delay a hike in the country's notoriously low gas prices until after the Olympics. But international demands -- China's subsidized gas prices were driving up prices everywhere else -- along with tight domestic supplies and political pressure to cut pollution and energy use, apparently motivated policy makers to act.

Car ownership in China is only around 3-4 percent, compared to 85 percent in the US. But car ownership is soaring every year, and if China keeps racing toward the US model, the results will not be pretty.

Back to the car ban: When officials tested the controls from August 17 to 20 last year, taking 1.3 million vehicles off the city roads each day, a haze lingered at least on some of those days. But officials said the ban cut emissions by 5,815 tons.

During a three-day 800,000 car ban during 2006's Sino-Africa summit, NASA satellites detected a cut in nitrogen oxide air pollution by about 40 percent.

Still, as we noted then, a car ban is a band-aid solution to the city's terrible traffic. With high demand for cars (1,300 new cars hit Beijing's roads every day), state-owned car companies, cheap cars and still cheap gas, officials face a long road to reducing the city's smog and traffic.

New, quality public transportation is crucial, and the city will add four new rail lines before the end of the year as part of a huge subway-building drive. But more effective would be a bigger cut in gas price subsidies, or permanent car restriction policies like the one that exists in Shanghai, where there are restrictions on the number of license plates available.

Better urban planning would help too. Currently Beijing is spreading like a pancake without a distinguishable center, a problem only exacerbated by cars and the roads that have been built to handle them. While it features great bike lanes, pedestrians face super-wide streets, inconvenient pedestrian bridges, and enormous distances.

Last year, Beijing said it was ruling out a car ban for the Olympics, focusing instead on public transportation so that "car owners will willingly give up driving."

To temper Beijing's driving boom -- and encourage exploration of alternative energy among other things -- the raise in fuel prices could be just the thing. As a report by China International Capital Corp. said, "After today's increase, there is still 60 percent room for China to further raise domestic fuel prices to move in line with the international levels..."

The Olympics are only three weeks long. What will Beijing do for the many weeks that follow?